The Republicans are gutting the Wall Street reform bill. This is a pretty complicated topic and there are two additional points I’d like to make:
–The idea that funding for regulatory agencies is a budget issue is essentially phony: the agencies are not funded through the federal budget, but by the federal reserve bank from the proceeds of the sale of treasury bonds. The original idea–or intent, as conservatives like to say–was to keep the funding for financial regulatory agencies outside the realm of politics. What the Republicans are trying to do now is entirely unprecedented.
–Elizabeth Warren has been working hard to win Republican, and some Democratic, hearts and minds. Even Spencer Bachus, the new chair of the House Financial Services Committee, which voted to defund the Consumer Finance Protection Bureau, has had some not un-nice things to say about Warren lately. Warren has also, wisely, hired Holly Petraeus–the General’s wife–to focus on the effects of scam-lending on the military (which are significant, as any one who has hung out around a military base can tell you).
I really hope that Barack Obama chooses to make a strict financial regulatory scheme a bright line test in the upcoming budget battle. I fear, however, that Senator Durbin is right and the President will feel there are bigger fish to fry.
Correction: My esteemed colleague Adam Sorensen points out that while the CFPB would be funded by the fed, the SEC ad CFTC are not.